Vintage Santelli: PelosiCare Threat to Recovery; Dow Climb Due to Market Bet on Fed Response to Unemployment

A rising Dow Jones Industrial Average (DJIA) means better times are on the way, right? Not necessarily, according to CNBC CME floor reporter and tea party movement inspiration Rick Santelli.

Santelli made an appearance on CNBC's Nov. 6 "Fast Money," a show which the host, Melissa Lee, is skittish about a discussion that politics interferes with the market is a reality. Nonetheless, Santelli explained there so happens to be correlation between a rise in unemployment rates and the rise in the Dow Jones Industrial Average.

"[I] think we're building a stairway to heaven in Dow prices on the back of paper and I think that, you know it seems kind of dire to me that 8 percent - 8,000, 9 percent - 9,000, 10.2 - 10,000," Santelli said. "I shudder to think where the unemployment rate is going to be at 11 and 12,000 in the Dow."

Lee challenged Santelli on his premise and applied the conventional wisdom that stocks are forward-looking indicators and that unemployment is a lagging indicator. That's not the case, according to Santelli, who expressed his concern about the pending health care legislation being debated in the House of Representatives under the leadership of House Speaker Nancy Pelosi.

"Not anymore," Santelli replied. "How can it be? What are they going to do in Washington at midnight tomorrow? How can it possibly be forward looking? We don't know what they're going to do with our money - with trillions of dollars, one-sixth of the economy and that's one example."

But here's how the equation works as Santelli explained - as long as unemployment continues to go up, the Federal Reserve will be reluctant to raise interest rates. And that's a bet investors are going to take - that as long as monetary policy remains easy, investors will continue to fuel the market.

"That's the game - that's why stocks keep going up on an unemployment rate, where the unemployment rate is important to America and investors that are invested in the stock market can still profit. Hey - you know, the last three recessions - what size was Google or Amazon? You know, let's look at who used to hire and how recessions used to be. You know, GM hired hundreds of thousands of people. What were their market capitalizations? Look at Google - how many people do they have? Do you really see this changing?"